Wind Dance Farm, Inc. v. HUGHES SUPPLY

• Decision Date: 28 July 2003
• Docket Number: No. 22A04-0210-CV-501.,22A04-0210-CV-501.
• Parties: WIND DANCE FARM, INC., Appellant-Defendant, v. HUGHES SUPPLY, INC., Appellee-Plaintiff.
• Court: Indiana Appellate Court

792 N.E.2d 79

WIND DANCE FARM, INC., Appellant-Defendant, v. HUGHES SUPPLY, INC., Appellee-Plaintiff.

No. 22A04-0210-CV-501.

Court of Appeals of Indiana.

July 28, 2003.

John A. Kraft, Young, Lind, Endres & Kraft, New Albany, IN, Attorney for Appellant.

David J. Jurkiewicz, Feiwell & Hannoy, P.C., Indianapolis, IN, Attorney for Appellee.

OPINION

BAILEY, Judge.

Case Summary

In this interlocutory appeal, Wind Dance Farm, Inc. ("Wind Dance") challenges the denial of its motion to dismiss a mechanic's lien foreclosure suit filed by Hughes Supply, Inc. ("Hughes"). We affirm.

Issue

The question raised is whether Wind Dance provided sufficient statutory notice requiring Hughes to commence suit within thirty days, rendering the present foreclosure suit untimely and the mechanic's lien null and void.

Facts and Procedural History

Wind Dance is the owner of a parcel of Floyd County real estate being developed as a subdivision known as "Woods of Lafayette." (Appellant's App. 13.) Wind Dance contracted with L.D. Rice Construction, Inc., for construction of a sanitary sewer on that property, and Hughes apparently supplied material for the project. On March 21, 2001, Hughes filed a Sworn Statement of Intention to Hold Mechanic's Lien in the Office of the Floyd County Recorder, claiming an unpaid principal balance of $63,501.59 for labor and materials furnished to the Woods of Lafayette.

In an April 4, 2001 letter to Hughes and its counsel, Wind Dance requested that Hughes release the mechanic's lien "as not having been timely filed." (Appellant's App. 7.) In a written response, Hughes's attorney advised Wind Dance that he represented Hughes and asked Wind Dance to "please cease direct communications with Hughes Supply, Inc." (Appellant's App. 8.) Wind Dance sent a second letter, dated April 12, 2001, to Hughes's counsel, again requesting a release of the mechanic's lien "due to the untimely filing" and cautioned that, should Hughes bring a foreclosure action, Wind Dance would counterclaim for slander of title. (Appellant's App. 9.)

The next month, on May 15, 2001, Wind Dance recorded an Affidavit of Service with the Floyd County Recorder. That Affidavit provides in part:

4. That this affiant on behalf of his client sent a notice to Hughes Supply, Inc., originally on April 4, 2001[,] requesting the lien be released of record.

....

6. That on April 12, 2001, pursuant to the direction of [Hughes's attorney] ... the affiant, on behalf of his client, sent a notice to [Hughes's attorney], to either have his client release the lien or commence foreclosure proceedings, and said notice was sent more than thirty (30) days prior to the date of this Affidavit.

7. That more than thirty (30) days have passed since the notice being forwarded to the attorney for Hughes Supply, Inc., and no suit or foreclosure on said lien is pending and no unsatisfied judgment has been rendered on said lien.

8. That this Affidavit is made in accordance with Indiana Code 32-8-3-10 [now Indiana Code Section 32-28-3-10] for purposes of the Recorder of Floyd County, Indiana, to rely upon said Affidavit for the purposes of releasing the Mechanic's Lien as referenced herein.

(Appellant's App. 11-12.) Relying on the Affidavit of Service, the Floyd County Recorder released the mechanic's lien.¹

On February 15, 2002, approximately ten months after Wind Dance's second letter, Hughes commenced this action to foreclose its mechanic's lien, claiming a balance due of $44,460.83. Wind Dance answered the complaint on April 22, 2002, presenting several defenses, including an assertion that the complaint was "barred by release," and asserting a counterclaim for slander of title. (Appellant's App. 16-17.) On that same date, Wind Dance filed a Motion to Dismiss the complaint. Following a hearing, the trial court denied the motion but granted Wind Dance's Motion to Certify Interlocutory Appeal. This court accepted jurisdiction over the case on December 16, 2002.

Discussion and Decision

A. Standard of Review

Whether the two letters sent by Wind Dance to Hughes satisfy the notice requirements of the relevant statute is a question of law. See Duchon v. Ross, 599 N.E.2d 621, 624-25 (Ind.Ct.App.1992) (analyzing whether landlords' letter to tenant was insufficient notification as a matter of law). Interpretation of the relevant statute is also a question of law for the court. City of Elkhart v. Agenda: Open Gov't, Inc., 683 N.E.2d 622, 626 (Ind.Ct.App. 1997). Appellate courts review questions of law under a de novo standard, owing no deference to the trial court's legal conclusions. South Bend Tribune v. South Bend Cmty. Sch. Corp., 740 N.E.2d 937, 938 (Ind.Ct.App.2000).

In performing our analysis, we acknowledge that a mechanic's lien is a statutory creation. Ford v. Culp Custom Homes, Inc., 731 N.E.2d 468, 472 (Ind.Ct. App.2000). Decisional law has established twin principles applicable to the construction of mechanic's lien statutes. Lafayette Tennis Club, Inc. v. C.W. Ellison Builders, Inc., 406 N.E.2d 1211, 1213 (Ind.Ct.App. 1980). As the mechanic's lien is in derogation of the common law, statutory provisions relating to its creation and existence or to persons entitled to a lien are strictly construed. Id. In contrast, provisions relating to enforcement of the lien once attached are liberally construed to achieve their purpose of giving a lien to those entitled to such. Id.²

B. Analysis

Wind Dance filed its Affidavit of Service pursuant to Indiana Code Section 32-8-3-10, which provided:

The owner of property upon which a mechanic's lien has been taken, or any person or corporation having an interest therein, including mortgagees and lienholders, may notify, in writing, the owner or holder of the lien to commence suit thereon and if he fails to commence such suit within thirty (30) days after receiving such notice, the lien shall be null and void, but nothing contained herein shall prevent the claim from being collected as other claims are collected by law.

Any person who has given such notice by registered or certified mail to the holder of the lien at the address given in the notice of lien recorded may file an affidavit of service of said notice to commence suit with the recorder of the county in which said real estate is situated, which affidavit shall state the facts of said notice and that more than thirty (30) days have passed and no suit for foreclosure of said lien is pending and no unsatisfied judgment has been rendered on said lien; and it shall be the duty of the recorder to record said affidavit in the miscellaneous record book of his office and to certify on the face of the record of any such lien that the same is fully released and the real estate described in said lien shall thereupon be released from the lien thereof.³

(Emphasis added).

Typically, a lienholder has one year to foreclose a mechanic's lien. Haimbaugh Landscaping, Inc. v. Jegen, 653 N.E.2d 95, 103 (Ind.Ct.App.1995) (citing Indiana Code Section 32-8-3-6, now Section 32-28-3-6). Indiana Code Section 32-8-3-10 provides a mechanism by which a party with an interest in real estate may require the lienholder to commence suit before that time in order to clear title or to determine a claimant's lien rights. Lafayette Tennis Club, 406 N.E.2d at 1214. The failure to file an action within thirty days after receipt of proper notice voids the lien. IND.CODE § 32-8-3-10; Jegen, 653 N.E.2d at 103.

Unquestionably, proper notice is required so that the lien holder has an adequate opportunity to take action during the thirty-day period. The statute requires that written notice to commence suit be given by registered or certified mail to the holder of the lien. That process may assure that the proper person receives the notice and indicates that the enclosed communication imparts some legally significant information. Burggrabe v. Bd. of Pub. Works of Evansville, 469 N.E.2d 1233, 1236-37 (Ind.Ct.App.1984); Lafayette Tennis Club, 406 N.E.2d at 1214; but see Holmes v. Randolph, 610 N.E.2d 839, 845 (Ind.1993)

(noting that the use of certified mail provides a better record of receipt but does not necessarily increase the probability that the addressee will actually receive the notice). Further, mailing by registered or certified mail, return receipt requested, provides an objective method of ascertaining when the thirty-day period begins to run. See Smith v. Review Bd. of Ind. Employment Security Div., 439 N.E.2d 1334, 1338 (Ind.1982) (Hunter, J., dissenting to denial of transfer) (discussing the benefit in a different context).

Here, Wind Dance did not utilize either registered or certified mail. Nevertheless, Hughes concedes that it received the letters. We have held that substantial compliance with a statutory notice requirement is sufficient when notice is timely received. See, e.g., McGill v. Ind. Dep't of Correction, 636 N.E.2d 199, 202 (Ind.Ct. App.1994)

(observing that, although the Tort Claims Act requires hand delivery or sending by registered or certified mail, notice filed by regular mail constitutes substantial compliance if it is received within the statutory time limit). As Judge Ratliff reasoned, " `[T]o hold that the notice was defective because of its mode of delivery when the notice was received and the purpose of either hand delivery or registered or certified mail, that of assurance of receipt, was met, is contrary to logic and defies common sense.'" Burggrabe, 469 N.E.2d at 1236. Similarly, we find that Wind Dance's failure to comply with the statutory method of mailing does not in itself render the notice deficient.⁴

We next examine the quality of the notice. The first letter, dated April 4, 2001, is directed to Hughes and to its counsel and provides in part:

I have reviewed a certain Sworn Statement of Intention to Hold Mechanic's Lien filed in the office of the Floyd County Recorder on March 12, 2001. I have also reviewed the invoices from Hughes Supply, Inc., to

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